10-Q 1 mntv-20220331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 001-38664

 

img183556169_0.jpg 

Momentive Global Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

80-0765058

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

One Curiosity Way

San Mateo, California, 94403

(650) 543-8400

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value
$0.00001 per share

MNTV

The Nasdaq Stock Market LLC

(The Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

The number of shares of registrant’s common stock outstanding as of April 29, 2022 was: 150,032,380.

 

 


 

Momentive Global Inc.

Quarterly Report on Form 10-Q

For the quarterly period ended March 31, 2022

TABLE OF CONTENTS

 

 

 

 

Page

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Condensed Consolidated Financial Statements (unaudited)

 

4

 

Condensed Consolidated Balance Sheets

 

4

 

Condensed Consolidated Statements of Operations

 

5

 

Condensed Consolidated Statements of Comprehensive Loss

 

6

 

Condensed Consolidated Statements of Stockholders’ Equity

 

7

 

Condensed Consolidated Statements of Cash Flows

 

8

 

Notes to Condensed Consolidated Financial Statements

 

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

35

Item 4.

Controls and Procedures

 

36

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

37

Item 1A.

Risk Factors

 

37

Item 2.

Unregistered Sales of Equity Securities

 

70

Item 6.

Exhibits

 

71

 

Signatures

 

 

 

1


 

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “would,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

our ability to attract new users or convert registered users to paying users;
our ability to retain paying users;
our ability to convert organizations who purchase solely through our self-serve channel to sales-assisted relationships;
our ability to maintain and improve our products, including our enterprise-grade product offerings;
our ability to upsell and cross-sell within our existing customer and user base;
our future financial performance, including trends in revenue, costs of revenue, gross profit or gross margin, operating expenses, capital expenditures and paying users;
possible harm caused by significant disruption of service or loss or unauthorized access to users’ data;
our expectations regarding the potential impacts on our business and real estate needs of the COVID-19 pandemic and related public health measures;
the effect of general economic and political conditions, including inflation and Russia’s invasion of Ukraine;
our ability to prevent serious errors or defects in our products;
our ability to respond to rapid technological changes;
our ability to compete successfully;
our ability to protect our brand and risks related to our rebranding;
the demand for our survey platform or for survey software solutions in general;
our expectations and management of future growth;
our ability to accelerate growth with the introduction and scaling of a significant outbound salesforce;
our ability to attract large organizations as users;
our ability to attract and retain key personnel and highly qualified personnel;
our ability to manage our international expansion;
our ability to obtain adequate commercial space as our workforce grows;
our ability to maintain, protect and enhance our intellectual property;
our ability to effectively integrate our products and solutions with others;
our ability to achieve or maintain profitability;
our ability to successfully implement any restructuring of our operations;
our ability to manage our outstanding indebtedness;
our ability to manage trading activity under our stock repurchase program;
our ability to successfully identify, acquire and integrate companies and assets; and
our ability to offer high-quality customer support.

2


 

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

3


 

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MOMENTIVE GLOBAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

 

(in thousands, except par value)

 

March 31, 2022

 

December 31, 2021

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

238,035

 

$

305,525

 

Accounts receivable, net of allowance of $1,278 and $894

 

 

32,864

 

 

32,489

 

Deferred commissions, current

 

 

8,586

 

 

7,945

 

Prepaid expenses and other current assets

 

 

16,543

 

 

11,363

 

Total current assets

 

 

296,028

 

 

357,322

 

Property and equipment, net

 

 

3,925

 

 

5,442

 

Operating lease right-of-use assets

 

 

50,424

 

 

52,232

 

Capitalized internal-use software, net

 

 

28,688

 

 

28,158

 

Acquisition intangible assets, net

 

 

7,845

 

 

10,773

 

Goodwill

 

 

462,417

 

 

463,736

 

Deferred commissions, non-current

 

 

13,990

 

 

13,200

 

Other assets

 

 

8,751

 

 

9,061

 

Total assets

 

$

872,068

 

$

939,924

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

11,910

 

$

7,204

 

Accrued expenses and other current liabilities

 

 

23,857

 

 

30,725

 

Accrued compensation

 

 

38,923

 

 

45,873

 

Deferred revenue, current

 

 

215,481

 

 

200,658

 

Operating lease liabilities, current

 

 

9,598

 

 

9,587

 

Debt, current

 

 

1,900

 

 

1,900

 

Total current liabilities

 

 

301,669

 

 

295,947

 

Deferred revenue, non-current

 

 

734

 

 

1,165

 

Deferred tax liabilities

 

 

5,919

 

 

5,701

 

Debt, non-current

 

 

184,341

 

 

209,816

 

Operating lease liabilities, non-current

 

 

64,547

 

 

66,938

 

Other non-current liabilities

 

 

5,838

 

 

5,883

 

Total liabilities

 

 

563,048

 

 

585,450

 

Commitments and contingencies (Note 11)

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock ($0.00001 par value; 100,000 shares authorized; no shares issued and outstanding)

 

 

 

 

 

Common stock ($0.00001 par value; 800,000 shares authorized; 150,420 and 150,398 shares issued and outstanding)

 

 

2

 

 

2

 

Additional paid-in capital

 

 

964,474

 

 

971,604

 

Accumulated other comprehensive income (loss)

 

 

(533

)

 

414

 

Accumulated deficit

 

 

(654,923

)

 

(617,546

)

Total stockholders’ equity

 

 

309,020

 

 

354,474

 

Total liabilities and stockholders’ equity

 

$

872,068

 

$

939,924

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

4


 

MOMENTIVE GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 

 

 

Three Months Ended March 31,

 

(in thousands, except per share amounts)

 

2022

 

2021

 

Revenue

 

$

116,986

 

$

102,298

 

Cost of revenue(1)(2)(3)

 

 

22,903

 

 

20,772

 

Gross profit

 

 

94,083

 

 

81,526

 

Operating expenses:

 

 

 

 

 

Research and development(1)(3)

 

 

36,716

 

 

32,983

 

Sales and marketing (1)(2)(3)

 

 

59,636

 

 

52,036

 

General and administrative(1)(3)

 

 

27,917

 

 

23,322

 

Restructuring(1)(2)

 

 

4,883

 

 

 

Total operating expenses

 

 

129,152

 

 

108,341

 

Loss from operations

 

 

(35,069

)

 

(26,815

)

Interest expense

 

 

2,226

 

 

2,299

 

Other non-operating (income) expense, net

 

 

(134

)

 

315

 

Loss before income taxes

 

 

(37,161

)

 

(29,429

)

Provision for income taxes

 

 

216

 

 

218

 

Net loss

 

$

(37,377

)

$

(29,647

)

Net loss per share, basic and diluted

 

$

(0.25

)

$

(0.20

)

Weighted-average shares used in computing basic and diluted net loss per share

 

 

150,262

 

 

144,692

 

 

(1) Includes stock-based compensation, net of amounts capitalized as follows:

 

 

 

Three Months Ended March 31,

 

(in thousands)

 

2022

 

2021

 

Cost of revenue

 

$

1,409

 

$

1,482

 

Research and development

 

 

8,644

 

 

9,497

 

Sales and marketing

 

 

6,065

 

 

5,778

 

General and administrative

 

 

7,375

 

 

6,842

 

Restructuring

 

 

2,761

 

 

 

Stock-based compensation, net of amounts capitalized

 

$

26,254

 

$

23,599

 

 

(2) Includes amortization of acquisition intangible assets as follows:

 

 

 

Three Months Ended March 31,

 

(in thousands)

 

2022

 

2021

 

Cost of revenue

 

$

1,414

 

$

1,490

 

Sales and marketing

 

 

1,452

 

 

1,133

 

Restructuring

 

 

45

 

 

 

Amortization of acquisition intangible assets

 

$

2,911

 

$

2,623

 

 

(3) Includes transaction expenses associated with the terminated merger with Zendesk. See Note 1 for additional information.

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

5


 

MOMENTIVE GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)

 

 

 

Three Months Ended March 31,

 

(in thousands)

 

2022

 

2021

 

Net loss

 

$

(37,377

)

$

(29,647

)

Other comprehensive loss:

 

 

 

 

 

Foreign currency translation gains (losses)(1)

 

 

(947

)

 

(2,953

)

Total other comprehensive loss(1)

 

 

(947

)

 

(2,953

)

Total comprehensive loss

 

$

(38,324

)

$

(32,600

)

 

(1) Net of tax effect which was not material.

See accompanying Notes to Condensed Consolidated Financial Statements.

 

6


 

MOMENTIVE GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

 

For the three months ended March 31, 2022

 

 

Common Stock

 

 

 

 

 

 

 

 

 

(in thousands)

 

Shares

 

Amount

 

Additional Paid-In Capital

 

Accumulated Other Comprehensive Income (Loss)

 

Accumulated Deficit

 

Total Stockholders’ Equity

 

December 31, 2021

 

 

150,398

 

$

2

 

$

971,604

 

$

414

 

$

(617,546

)

$

354,474

 

Common stock issued upon vesting of restricted stock units

 

 

877

 

 

 

 

 

 

 

 

 

 

 

Common stock issued upon stock option exercise

 

 

164

 

 

 

 

2,273

 

 

 

 

 

 

2,273

 

Issuance of restricted stock awards

 

 

1,031

 

 

 

 

 

 

 

 

 

 

 

Issuance of performance stock awards

 

 

361

 

 

 

 

 

 

 

 

 

 

 

Repurchases of common stock

 

 

(2,411

)

 

 

 

(36,376

)

 

 

 

 

 

(36,376

)

Stock-based compensation expense

 

 

 

 

 

 

26,973

 

 

 

 

 

 

26,973

 

Comprehensive loss

 

 

 

 

 

 

 

 

(947

)

 

 

 

(947

)

Net loss

 

 

 

 

 

 

 

 

 

 

(37,377

)

 

(37,377

)

March 31, 2022

 

 

150,420

 

$

2

 

$

964,474

 

$

(533

)

$

(654,923

)

$

309,020

 

For the three months ended March 31, 2021

 

 

Common Stock

 

 

 

 

 

 

 

 

 

(in thousands)

 

Shares

 

Amount

 

Additional Paid-In Capital

 

Accumulated Other Comprehensive Income (Loss)

 

Accumulated Deficit

 

Total Stockholders’ Equity

 

December 31, 2020

 

 

143,820

 

$

1

 

$

835,444

 

$

5,208

 

$

(494,297

)

$

346,356

 

Common stock issued upon vesting of restricted stock units

 

 

967

 

 

 

 

 

 

 

 

 

 

 

Common stock issued upon stock option exercise

 

 

641

 

 

 

 

9,572

 

 

 

 

 

 

9,572

 

Issuance of restricted stock awards

 

 

274

 

 

 

 

 

 

 

 

 

 

 

Cancellation of restricted stock awards

 

 

(64

)

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

24,158

 

 

 

 

 

 

24,158

 

Comprehensive loss

 

 

 

 

 

 

 

 

(2,953

)

 

 

 

(2,953

)

Net loss

 

 

 

 

 

 

 

 

 

 

(29,647

)

 

(29,647

)

March 31, 2021

 

 

145,638

 

$

1

 

$

869,174

 

$

2,255

 

$

(523,944

)

$

347,486

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

7


 

MOMENTIVE GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

 

 

 

Three Months Ended March 31,

 

(in thousands)

 

2022

 

2021

 

Cash flows from operating activities

 

 

 

 

 

Net loss

 

$

(37,377

)

$

(29,647

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

 

9,354

 

 

10,694

 

Non-cash leases expense

 

 

3,202

 

 

3,340

 

Stock-based compensation expense, net of amounts capitalized

 

 

26,254

 

 

23,599

 

Deferred income taxes

 

 

217

 

 

99

 

Bad debt expense

 

 

644

 

 

307

 

Other

 

 

727

 

 

508

 

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable

 

 

(1,047

)

 

(76

)

Prepaid expenses and other assets

 

 

(8,117

)

 

(4,682

)

Accounts payable and accrued liabilities

 

 

(2,341

)

 

9,251

 

Accrued compensation

 

 

(6,898

)

 

(9,274

)

Deferred revenue

 

 

14,283

 

 

16,985

 

Operating lease liabilities

 

 

(3,801

)

 

(3,786

)

Net cash provided by (used in) operating activities

 

 

(4,900

)

 

17,318

 

Cash flows from investing activities

 

 

 

 

 

Purchases of property and equipment

 

 

(441

)

 

 

Capitalized internal-use software

 

 

(2,565

)

 

(2,268

)

Net cash used in investing activities

 

 

(3,006

)

 

(2,268

)

Cash flows from financing activities

 

 

 

 

 

Proceeds from stock option exercises

 

 

2,273

 

 

9,553

 

Payments to repurchase common stock

 

 

(36,376

)

 

 

Repayment of debt

 

 

(25,550

)

 

(550

)

Net cash provided by (used in) financing activities

 

 

(59,653

)

 

9,003

 

Effect of exchange rate changes on cash

 

 

393

 

 

(309

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

(67,166

)

 

23,744

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

306,121

 

 

224,614

 

Cash, cash equivalents and restricted cash at end of period

 

$

238,955

 

$

248,358

 

Supplemental cash flow data:

 

 

 

 

 

Interest paid for term debt

 

$

2,009

 

$

2,177

 

Non-cash investing and financing transactions:

 

 

 

 

 

Stock compensation included in capitalized software costs

 

$

719

 

$

559

 

Accrued unpaid capital expenditures

 

$

207

 

$

547

 

Lease liabilities arising from obtaining right-of-use assets, net

 

$

 

$

2,676

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

8


 

 

MOMENTIVE GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

 

1. Company Overview and Basis of Presentation

Business

Momentive Global Inc. (the “Company”), formerly SVMK Inc., is an agile experience management company providing SaaS solutions that help businesses shape what’s next for their stakeholders. The Company's solutions enable customers to collect, analyze, and act on feedback from their existing customers, prospective customers, and employees. The Company offers artificial intelligence powered solutions across five major categories of use cases: 1) Market Insights; 2) Brand Insights; 3) Customer Experience; 4) Employee Experience; and 5) Product Experience, and delivers these solutions across three major product categories—Surveys, Customer Experience, and Market Research. The Company was incorporated in 2011 as SVMK Inc., a Delaware corporation, and is the successor to operations originally started in 1999. In June 2021, SVMK Inc. was rebranded and changed its legal name to Momentive Global Inc. As a result, its common stock began trading under the ticker symbol “MNTV” instead of “SVMK” on The Nasdaq Global Select Market. In February 2022, the company announced plans to consolidate its product portfolio under two brands and web surfaces—Momentive and SurveyMonkey. The Momentive brand will represent the Company's suite of upmarket solutions, while SurveyMonkey will support the Company's complementary products for value-oriented customers who prioritize speed and ease of use. The Company’s headquarters are located in the United States and its international operations are primarily based in Ireland, Canada and the Netherlands.

Termination of Proposed Merger with Zendesk

On October 28, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Zendesk, Inc. (“Zendesk”) and Milky Way Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Zendesk (“Merger Sub”). The Merger Agreement provided for the merger of Merger Sub into the Company (the "Merger"), with the Company surviving the merger as a wholly owned subsidiary of Zendesk. Under the terms of the Merger Agreement, the completion of the Merger was conditioned on the receipt of required approvals by the Company's and Zendesk's stockholders. On February 25, 2022, at a special meeting of Zendesk's stockholders, a proposal to approve the issuance of Zendesk shares in connection with the Merger was not approved by Zendesk's stockholders. As a result, following the special meeting on February 25, 2022, Zendesk terminated the Merger Agreement effective immediately, in accordance with its terms. None of the Company, Zendesk or Merger Sub are expected to have any further liability under the Merger Agreement, subject to its terms. The Company incurred transaction expenses related to employee retention bonuses, legal, accounting, financial advisory, and other costs associated with the Merger of $6.5 million, of which, $0.3 million is included in cost of revenue, $1.8 million is included in research and development, $1.7 million is included in sales and marketing, and $2.7 million is included in general and administrative expenses in the accompanying condensed consolidated statement of operations for the three months ended March 31, 2022. The employee retention bonuses granted in connection with the transaction will become payable subject to the employee's continued service through June 30, 2022.

Principles of Consolidation and Basis of Presentation

The accompanying interim condensed consolidated balance sheet as of March 31, 2022, the statements of operations, comprehensive loss, stockholders’ equity and cash flows for the three months ended March 31, 2022 and 2021 are unaudited. Such condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. These condensed consolidated financial statements include the results of operations of the Company and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated. Certain other prior year balances have been reclassified to conform to the current year presentation. Such reclassifications did not affect our results of operations or operating, investing and financing cash flows.

These condensed consolidated financial statements do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. In management’s opinion, the condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and include all normal recurring adjustments necessary for the fair presentation of the Company’s financial position as

 

9


MOMENTIVE GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

 

of March 31, 2022, the results of operations and cash flows for the three months ended March 31, 2022 and 2021. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual periods.

These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Form 10-K filed with the SEC on February 14, 2022.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenue and expenses during the reporting periods covered by the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates due to a variety of factors, including the unforeseen effects of the COVID-19 pandemic on the Company’s business and financial results. Due to the COVID-19 pandemic, there is ongoing uncertainty and significant disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstances that would require an update to its estimates, judgments or assumptions or a revision to the carrying value of its assets or liabilities as of the date of issuance of its financial statements. These estimates, judgments and assumptions may change in the future, as new events occur or additional information is obtained. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable. The Company’s most significant estimate and use of judgment involves the valuation of acquired goodwill and intangibles from acquisitions.

Segment Information

The Company operates as a single operating segment. The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer, who reviews the Company’s operating results on a consolidated basis in order to make decisions about allocating resources and assessing performance for the entire company. The CODM uses one measure of profitability and does not segment the Company’s business for internal reporting. See Note 4 for additional information regarding the Company’s revenue by geographic area.

Related Party Transactions

Certain members of the Company’s board of directors serve as board members, are executive officers of and/or (in some cases) are investors in companies that are customers and/or vendors of the Company. The Company incurred related party expenses of $0.9 million and $0.8 million for the three months ended March 31, 2022 and 2021, respectively.

 

2. Summary of Significant Accounting Policies

There have been no material changes in our significant accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, 2021.

Restructuring

From time to time, the Company may implement a management-approved restructuring plan to improve efficiencies across the organization, reduce its cost structure, and/or better align its resources with the Company’s strategy. Restructuring charges can include severance costs to eliminate a specified number of employees, expenses to vacate real estate and consolidate operations, contract cancellation costs, impairment of certain assets, and other related costs.

Costs associated with a restructuring plan are recognized and measured at fair value in the condensed consolidated statement of operations in the period in which the liability is incurred. These restructuring initiatives may require the Company to make estimates in several areas including: (i) expenses for employee severance and other separation costs; and (ii) realizable values of assets made redundant, obsolete, or excessive.

Other Non-Operating (Income) Expense

Other non-operating (income) expense, net consists primarily of interest income, net foreign currency exchange (gains) losses, net realized gains and losses related to investments, and other. The components of other non-operating (income) expense recognized in the condensed consolidated financial statements is as follows:

 

10


MOMENTIVE GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

 

 

 

 

Three Months Ended March 31,

 

(in thousands)

 

2022

 

2021

 

Interest income

 

$

(165

)

$

(134

)

Foreign currency (gains) losses, net

 

 

127

 

 

374

 

Other (income) expense, net

 

 

(96

)

 

75

 

Other non-operating (income) expense, net

 

$

(134

)

$

315

 

 

Accounting Pronouncement Not Yet Adopted

Reference Rate Reform: In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 is intended to provide temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. This guidance is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company does not expect this update will have a material impact on its condensed consolidated financial statements and related disclosures.

 

3. Revenue and Deferred Revenue

 

Disaggregated revenue

Revenue by sales channel was as follows:

 

 

Three Months Ended March 31,

 

(in thousands)

 

2022

 

2021

 

Self-serve revenue

 

$

75,803

 

$

71,112

 

Sales-assisted revenue

 

 

41,183

 

 

31,186

 

Revenue

 

$

116,986

 

$

102,298

 

 

Self-serve revenues are generated from products purchased independently through our website.

Sales-assisted revenues are generated from products sold to organizations through our sales team.

In addition, see Note 4 for information regarding the Company’s revenue by geographic area.

Deferred revenue

The Company recognized into revenue $88.6 million and $74.3 million during the three months ended March 31, 2022 and 2021, respectively, that was included in the deferred revenue balances at the beginning of each respective period.

Transaction price allocated to the remaining performance obligations

As of March 31, 2022, future estimated revenue related to non-cancelable performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period was $245.4 million. The substantial majority of the unsatisfied performance obligations will be satisfied over the next twelve months.

 

4. Geographical Information

Revenue by geography is generally based on the billing address of the customer. For purposes of its geographic revenue disclosure, the Company defines a customer as an organization. An organization may consist of an individual paying user, multiple paying users within an organization or the organization itself. The following table sets forth the percentage of revenue by geographic area:

 

11


MOMENTIVE GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

2021

 

United States

 

 

64

%

 

64

%

Rest of world

 

 

36

%

 

36

%

 

No other country outside of the United States comprised 10% or greater of the Company’s revenue for each of the three months ended March 31, 2022 and 2021, respectively.

 

5. Cash and Cash Equivalents

As of March 31, 2022 and December 31, 2021, the following table provides a reconciliation of the amount of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the total of the same such amounts shown in the condensed consolidated statements of cash flows:

(in thousands)

 

March 31, 2022

 

December 31, 2021

 

Cash and cash equivalents

 

$

238,035

 

$

305,525

 

Restricted cash included in prepaid expenses and other current assets

 

 

920

 

 

271

 

Restricted cash included in other assets

 

 

 

 

325

 

Total cash, cash equivalents and restricted cash

 

$

238,955

 

$

306,121

 

 

Included in cash and cash equivalents are cash in transit from payment processors for credit and debit card transactions of $3.7 million and $1.1 million as of March 31, 2022 and December 31, 2021, respectively.

 

6. Fair Value Measurements

Assets and liabilities recorded at fair value in the condensed consolidated financial statements are categorized based on the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels which directly relate to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities are as follows:

Level 1 – Observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of the Company’s financial instruments, which generally include cash equivalents, accounts receivable and accounts payable, approximate their fair values due to their short maturities. Based on borrowing rates currently available to the Company for debt with similar terms and consideration of default and credit risk, the fair value of the Company’s debt was approximately $186.4 million and $211.8 million as of March 31, 2022 and December 31, 2021, respectively.

As of March 31, 2022 and December 31, 2021, respectively, the Company did not have any financial instruments accounted for pursuant to ASC 820, Fair Value Measurement.

 

 

12


MOMENTIVE GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

 

7. Property and Equipment

As of March 31, 2022 and December 31, 2021, property and equipment consisted of the following:

 

(in thousands)

 

March 31, 2022

 

December 31, 2021

 

Computer equipment

 

$

8,015

 

$

8,017

 

Leasehold improvements

 

 

54,321

 

 

54,500

 

Furniture, fixtures, and other assets

 

 

10,567

 

 

10,577

 

Gross property and equipment

 

 

72,903

 

 

73,094

 

Less: Accumulated depreciation

 

 

(68,978

)

 

(67,652

)

Property and equipment, net

 

$

3,925

 

$

5,442

 

 

Depreciation expense was $1.4 million and $3.5 million during the three months ended March 31, 2022 and 2021, respectively.

8. Intangible Assets and Goodwill

Acquisition intangible assets, net

As of March 31, 2022 and December 31, 2021, intangible assets, net consisted of the following:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

(in thousands)

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Net
Carrying
Amount

 

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Net
Carrying
Amount

 

Customer relationships

 

$

20,378

 

$

(13,757

)

$

6,621

 

 

$

20,426

 

$